Term insurance, a kind of life insurance, is an inexpensive
way in which you can get coverage for a specific period. You will have to pay
premiums which are at fixed rates for the relevant time period. Term life
insurance differs from permanent life insurance or whole life insurance which
offers coverage for a lifetime for premiums which are paid at fixed rates. This
form of insurance is similar to other types of insurance. Usually a term
insurance will range from 1 year to 30 years with 20 years being the most
common term. The initial cost of term insurance is lower in comparison to
permanent insurance.
Fund expenses easily
Term insurances are cheaper as you will be paying only for a lump sum amount which your beneficiaries will receive during the term of the policy on your demise. If you have started a family and you have a limited budget term life insurance is the ideal choice. If you need to fund your teenager’s college expenses, you can consider a term life insurance. The insurance policy will help you to meet the expenses during the college years after which you will no longer need the coverage. In such a situation, it is advised that you opt for term life insurance which will help you to meet the financial expenses.
Converting the policy
at the end of the term, you can renew your policy. When you renew the policy, you may have to appear for a medical test and answer some questions which are related to your health status and lifestyle. With good health and healthy living habits you can expect to re-qualify for the policy at reasonable rates without having to overspend. Most insurance companies will allow you to convert a term insurance into a permanent policy.
Two important choices
a term life insurance is of two kinds, the annual renewable term and the level premium term. The annual renewable term insurance will offer coverage for a year as you renew the policy annually. The level premium term insurances offer coverage for multiyear periods such as 5 to 20 years or more. In case of annual renewable term insurances you will have to pay low premiums initially but with time the premiums may become costlier. In the case of level premium Term Insurance Plans, the premium rates remain fixed. If you want to insulate yourself from changes in premium rates, this is the right choice. You can enjoy peace of mind as the rates of premium remain fixed.
Points to bear in mind
a term insurance will not pay anything if the insured survives the term period. There are certain factors which you should consider before you opt for this kind of insurance. Ascertain the duration of your insurance need and compare it to the term period which is guaranteed. Compare the quotes which are being offered by multiple carriers. Before you narrow down on the insurance carrier, check his financial strength. It is an important factor which will decide whether you can convert your term insurance policy to a cash value policy if need arises. Evaluating the banded rates offered by term life insurance carriers is important.
Fund expenses easily
Term insurances are cheaper as you will be paying only for a lump sum amount which your beneficiaries will receive during the term of the policy on your demise. If you have started a family and you have a limited budget term life insurance is the ideal choice. If you need to fund your teenager’s college expenses, you can consider a term life insurance. The insurance policy will help you to meet the expenses during the college years after which you will no longer need the coverage. In such a situation, it is advised that you opt for term life insurance which will help you to meet the financial expenses.
Converting the policy
at the end of the term, you can renew your policy. When you renew the policy, you may have to appear for a medical test and answer some questions which are related to your health status and lifestyle. With good health and healthy living habits you can expect to re-qualify for the policy at reasonable rates without having to overspend. Most insurance companies will allow you to convert a term insurance into a permanent policy.
Two important choices
a term life insurance is of two kinds, the annual renewable term and the level premium term. The annual renewable term insurance will offer coverage for a year as you renew the policy annually. The level premium term insurances offer coverage for multiyear periods such as 5 to 20 years or more. In case of annual renewable term insurances you will have to pay low premiums initially but with time the premiums may become costlier. In the case of level premium Term Insurance Plans, the premium rates remain fixed. If you want to insulate yourself from changes in premium rates, this is the right choice. You can enjoy peace of mind as the rates of premium remain fixed.
Points to bear in mind
a term insurance will not pay anything if the insured survives the term period. There are certain factors which you should consider before you opt for this kind of insurance. Ascertain the duration of your insurance need and compare it to the term period which is guaranteed. Compare the quotes which are being offered by multiple carriers. Before you narrow down on the insurance carrier, check his financial strength. It is an important factor which will decide whether you can convert your term insurance policy to a cash value policy if need arises. Evaluating the banded rates offered by term life insurance carriers is important.
[Source: http://onlinelifeinsurance1.weebly.com/blog/a-primer-which-helps-you-understand-term-insurance-and-its-importance]
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